Is March Madness Really Worth $10.8 Billion?

When the 2011 version of the NCAA Men's Basketball Division I tournament begins in a few weeks, it will have a new format, new marketing partners and new media destinations.

The event best known as March Madness will also have a new price tag, one that was so high it took the joint effort of two communications companies to afford it.

In 1999, CBS signed an 11-year, $6 billion deal for sole broadcast rights to the NCAA tournament. Last year, before that deal had expired, CBS Sports and Turner Broadcasting System formed an alliance that eventually netted them a 14-year, $10.8 billion deal with the NCAA. Beginning this year, tournament games will be shown across four networks: CBS, TBS, TNT and truTV, the latter three divisions of Time Warner subsidiary TBS.

Along with this increase in broadcast viewing destinations will come an increase in opportunities available to marketers. The number of teams invited to the tournament went up from 64 to 68, expanding an opening-round format previously known as the nondescript "play-in game" to the much more marketing-friendly moniker of "First Four."

The 2011 tournament will begin with bracket assignments on "Selection Sunday," March 13, on CBS. The next day, March 14, is now being billed -- and was pitched to potential sponsors -- as "National Bracket Day," to include extended programming across CBS and Turner platforms. The First Four will be played on March 15-16, shown nationally on truTV. The Final Four will be played April 2-4 in Houston, shown on CBS.

Also expanded are such lucrative adjuncts as "March Madness on Demand," which will offer live online coverage of every game and is being "powered" by AT&T, Coca-Cola Zero and Capital One. Last year, MMOD attracted a record 8.3 million unique visitors. Broadcast viewers will also see enhanced versions of "Infiniti NCAA Tip-Off," "AT&T At the Half" and "Inside March Madness presented by Buick."

"Sales and corporate response are even better than what we expected," says David Levy, president of sales, distribution and sports for Turner. That includes new NCAA corporate sponsorship deals with both Infiniti and Unilever.
Although there has been some initial grumbling about the channel changing needed to watch all the games, CBS and Turner are optimistic that viewers will acclimate. According to Levy, "[We anticipate] eyeballs will increase 25%" over 2010.

Last year, CBS said, more than 48 million viewers watched at least some of the championship game between Duke and Butler. That was up 31% over 2009 and the most since 1997, when 50 million viewers watched Arizona against Kentucky.

That's good news for the NCAA's corporate partners, which also include Enterprise, The Hartford, Hershey's, LG, Lowe's, Kraft Food's Planters and UPS.

Industry analysts estimate the cost of a 30-second spot would start at about $100,000 for early rounds and top $1 million for the Final Four. That should help CBS and Turner begin to offset the bill for broadcast rights. "I'm not proud of spending $10.8 billion," said Levy, "but it is the largest sports deal ever."

Of course, it's not just about marketing and Madison Avenue. The NCAA said the new agreement would provide "on average more than $740 million annually to our conferences and member schools to help student-athletes in 23 sports."

The answer in short to the ultimate question is; yes, March Madness is really worth $10.8 billion. The fact that over the past five years the month long playoff bracket has generated over $500 million per year in advertising dollars with ’08 claiming over $600 million, it is just a matter of simple math. Conservatively, $600 million over the next 14 years will allow CBS and Turner Sports to receive a luxurious return on their investment. Not only will company executives be smiling for the next decade and change, but so will the NCAA as you mentioned they will be the recipients of $700 million during the course of the deal. For companies looking to market their goods, this year’s games present them the opportunity to advertise during all games for the first time ever with an increasing amount of traffic watching the games via internet. Surely, for all parties involved, the $10.8 billion price tag is a fair price to pay.